Regulation

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Regulation to overcome the problems of market failure, therefore, seems a more attractive and practical proposal, and we propose below a system of price cap regulation. However, we first note that implementation of sufficient tobacco control regulations, with plain packaging being a key example,16 17 might also limit profitability. The impact of such policies on profits would, however, be far less certain than price cap regulation, particularly given the industry’s well documented history of circumventing previous advertising restrictions,18 20 and less immediate.